Former Grand Junction man charged with violating Colo. Consumer Protection Act

GRAND JUNCTION, Colo. — Tim Stubbs, a former Grand Junction man, fled to Costa Rica last year with his girlfriend rather than fight a lawsuit filed by Wisconsin's Attorney General for allegedly defrauding consumers through his National Rebate Fund business. Meanwhile, Colorado's attorney general was investigating Stubbs and NRF for violating Colorado's Consumer Protection Act.

Colorado is now proceeding with the case after serving Stubbs a summons at the home of a sister, Karen Santos, of Lake Havasu City, Ariz. Several previous attempts to serve Stubbs were unsuccessful until it was determined Stubbs was receiving mail in Arizona.

During a telephone interview Monday, Stubbs said he left the country because “the matter of government agencies filing suits got so expensive to defend.”

After Stubbs failed to appear in March in Wisconsin court to face its consumer protection lawsuit, a $5.5 million default judgment was entered against him.

Wisconsin filed liens against Stubbs' properties in Crested Butte and Grand Junction, based upon the state's $5.5 million judgment, said William Cosh, of the Wisconsin Attorney General's Office in an e-mail to the Free Press.

Stubbs also has $4.5 million in an escrow account at Christiana Bank and Trust Company in Delaware that is used to pay rebate claims. The account is frozen and Stubbs said he's afraid the states are going to seize the money for their own expenses.

Mike Saccone, communications director for the Colorado attorney general disputes that notion.

“Our goal is to access the money held in escrow and distribute it (to the consumers),” said Saccone.

“If it was already being done we wouldn't have this lawsuit.”

Several Grand Junction residents as well as consumers in Washington, Oregon, Wisconsin, California and Utah contacted the Free Press after it first reported the so-called “rebate scheme” in February. Each person who e-mailed the newspaper said they did not receive expected rebates worth thousands of dollars.

The Colorado Attorney General's Office said that it had received 198 complaints against NRF — 34 in 2008, and 164 so far in 2009.

Stubbs ceased paying out any claims as of February 2008, according to the Colorado attorney general,

Stubbs said he instructed the bank in March 2009 to pay out all the claimants but it's not been done.

“I don't know what the hold-up is,” Stubbs said.

Rebate claims

The National Energy Rebate Fund created an incentive for consumers to purchase energy-efficient products from NERF-approved merchants by offering an opportunity to obtain a substantial rebate on the products.

“For the consumer it was supposed to be a no-lose situation,” Stubbs said. “The purpose of the program was to be wise and buy energy-efficient (and more expensive) products.” Customers also had the opportunity to recoup a larger rebate if they participated in an energy study, Stubbs said.

The money for the rebates came from dealers who paid Stubbs to participate in the program.

However, “in reality, only 8 percent of the money needed to pay full rebates was set aside, and there was no legitimate energy field study,” according to the Wisconsin Attorney General.

The program worked like this: A consumer was offered a rebate program in conjunction with a particular product. Vouchers were issued up to the price of the product. Once the voucher was issued, the consumer had 17 days from the date the voucher was issued to register with an entity called Fund Administrators. Registration was only accepted via registered mail.

The Fund Administrator sent one letter to the consumer two years after the rebate voucher was registered as a reminder that the consumer must submit the rebate claim between the 47th and 48th month after the claim was registered. Reminders from any other party were not permitted. Claims could be denied if it was determined a consumer had received a reminder from the dealer, the media or anyone else.

The consumer then had to file his or her rebate claim with the Fund Administrator no earlier than the 47th month from the voucher issue date, and no later than the 48th month from the voucher issue date.

Fund Administrators was portrayed as a third party entity who would determine the validity of the voucher. However, according to the attorney general, Fund Administrators was started by Stubbs and run by his former secretary, Susan Duran.

No response

Tim and Michelle Gossage never received a response after they submitted their rebate claim in November 2008. They said they followed the terms and conditions exactly. In addition to the money they didn't get, Michelle Gossage said she regrets the “wasted mental energy” of keeping track of the paperwork for four years

Grand Junction resident Wayne Flick said he also “jumped through all the hoops,” but did not get his expected rebate of $13,000. He said he'd at least like to get the $50 back he spent sending in the claims via registered mail. Flick said he tried to deliver the paperwork in person at one of NERF's offices but was denied.

“She said I had to send it by registered mail,” Flick said.

Elsie Tailleur, 77, also of Grand Junction, said her $4,000 claim was denied because she sent her claim certified, as opposed to registered mail — after a post office clerk told her it was basically the same.

Stubbs admits there are “hoops” to follow, to protect against fraudulent claims.

“Now (people) are mad at me because they didn't follow directions. That's not fair. Agencies are going to take my whole life savings. I don't know why they're suing me at this point. They're kicking a dead horse.”

The future

Although the Gossages did not get their $8,874 rebate, Stubbs said they still benefited from the program because they got a better product (energy-efficient windows).

“They paid fair market value. The vouchers were a free gift,” Stubbs said. “There's no cost to the consumer when run properly. Dealers are not allowed to charge the consumer.”

“Unfortunately the Gossages sent in the paperwork at the cut-off point when things shut down,” Stubbs said.

Stubbs said he closed the business in October 2008 because he couldn't afford to fight the Wisconsin and Colorado cases against him.

Stubbs has until July 13 to respond to the Colorado Attorney General's complaint. If he doesn't reply by the deadline, a judge will issue a default judgment and the attorney general will be allowed to collect civil penalties and restitution from him, Saccone said.

Stubbs said he's not sure how he'll respond.

“I should be getting conservation awards for this, and not be forced to shut down my business, and not be leaving my home because the states are bullying me. I couldn't afford the legal fees to fight them anymore,” Stubbs said.

According to a source in Costa Rica, who wishes to remain anonymous, Stubbs signed a lease on a $1.5 million house a short drive from the beach in the town of Novara. Locals often see Stubbs riding his mountain bike, said the source.

Stubbs refused to divulge his salary from the National Rebate Fund.

“As president and CEO I had an appropriate salary,” Stubbs said. “I made a good salary and deserved it.”

Stubbs asked for a face-to-face meeting in Grand Junction Saturday with the Free Press but rescheduled to speak instead via telephone.

When asked if he was returning to Costa Rica, Stubbs was evasive.

“I'm traveling quite a bit — Mexico, Panama, Costa Rica. I have friends in the time-share industry. I'm looking at working in the time-share industry. I'm not sure,” he said.

Reach Sharon Sullivan at ssullivan@gjfreepress.com.